Can I register for VAT when I incorporate to reclaim sole trade expenses?

Pre-registration rules 

Normally a taxable person can recover VAT incurred on their business’ expenses incurred prior to VAT registration subject to two key rules: 

1. In the case of goods (either stock for resale or fixed assets), the VAT was not incurred more than four years before the VAT registration and the goods remain ‘on hand’ at the date of registration and will be used in the newly registered business.
2. In the case of services, the VAT was incurred no more than six months before the date of registration and not consumed or on-supplied before the VAT registration. The VAT must have been incurred by the taxable person for the same business that is now registered for VAT (or the business that was to be carried on). 

The business must keep records showing the goods and services purchased, quantities, dates of purchase and dates of disposal. 

Pre-incorporation rules 

The six-month limit in respect of services and the four-year limit for goods also apply to pre-incorporation claims. It can also only be claimed to the extent that, at the time the tax was incurred, the relevant goods and services were used, or to be used, to make taxable supplies.  

The following conditions must be met to claim input tax for expenses before your company was incorporated:  

• The goods or services were bought for the benefit of the company. 
• The person acquiring the goods or services was a shareholder, director or employee of the company and not a taxable person at that time. 
• The company has arranged to pay back the person who acquired the goods or services. 
• The goods or services were acquired for the business carried on by the company – not for a different purpose at the time they were acquired. 

For example, you could not recover the VAT on a van that was purchased for your sole trade business  as a condition of claiming pre-incorporation input tax is that the goods or services were supplied for the purposes of a business to be carried on by the company and they must not have been used for ‘any purpose other than such a business’. 

Need some help with your VAT? 

If you would like any assistance with managing your VAT or company affairs, please contact our team at TaxAssist Accountants on ::telephone:. or use our online contact form here. 

Last updated 11 Dec 2025 | First published 11 Dec 2025

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This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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